Orrstown Financial Services reported third-quarter 2026 net income of $22.8 million, up from $21.2 million in the second quarter and $21.9 million a year earlier. Diluted earnings per share rose to $1.17 from $1.09 in the prior quarter and $1.13 in the third quarter of 2025.
Net interest income increased $4.5 million sequentially to $53.3 million, while net interest margin widened 25 basis points to 4.12% from 3.87% in the second quarter. The company said the second quarter margin included $1.6 million of accelerated amortization tied to redeemed subordinated notes; excluding that item, the second-quarter margin was 4.00%.
Return on average assets improved to 1.60% from 1.53%, and return on average equity rose to 14.62% from 13.96%. Efficiency ratio improved to 56.0% from 60.1%.
Loans held for investment increased $95.3 million from June 30 to $4.2 billion at Sept. 30, a 9% annualized increase. Commercial loans rose $45.4 million, home equity lines of credit increased $31.6 million, and first-lien residential mortgages grew $17.0 million. Classified loans fell $4.0 million to $45.2 million, and nonaccrual loans declined $0.9 million to $22.9 million. Nonaccrual loans as a percentage of total loans fell to 0.54% from 0.58%.
Deposits declined $38.1 million in the quarter, though total deposits remained $4.6 billion. Time deposits fell $28.1 million, interest-bearing demand deposits dropped $25.1 million, non-interest-bearing deposits decreased $24.8 million, and savings deposits were down $8.7 million. Those declines were partly offset by a $48.6 million increase in money market deposits. The loan-to-deposit ratio increased to 92% from 89%.
Investment securities declined $29.9 million to $919.4 million. The portfolio’s duration shortened to 4.2 years from 4.5 years. Unrealized losses on investment securities increased $41.6 million during the quarter.
Borrowings climbed to $417.3 million from $274.8 million, an increase of $142.5 million, as the company funded loan growth. Available alternative funding sources totaled $1.7 billion.
Provision for credit losses on loans increased to $1.1 million from $0.4 million. Net charge-offs were $1.0 million, down from $1.2 million. The allowance for credit losses on loans rose to $46.8 million from $46.6 million, while the allowance as a percentage of total loans edged down to 1.11% from 1.13%.
Noninterest income slipped to $13.4 million from $13.8 million. Swap fee income fell to $0.4 million from $0.7 million, mortgage banking income declined to $0.2 million from $0.4 million, and wealth management income inched up to $6.0 million from $5.9 million.
Noninterest expenses decreased to $37.3 million from $37.7 million. Professional services expense fell to $1.0 million from $1.2 million, other operating expenses declined to $3.9 million from $4.3 million, and advertising and bank promotions dropped to $0.4 million from $1.1 million. Salaries and benefits rose to $22.4 million from $22.2 million, while taxes other than income increased to $1.0 million from $0.4 million.
The effective tax rate increased to 19.4% from 14.2%. Federal income tax credits reduced tax expense by $0.4 million in the third quarter, compared with $1.6 million in the second quarter.
Shareholders’ equity fell to $605.2 million from $621.7 million. Tangible book value per common share declined to $25.96 from $26.71, and the tangible common equity ratio slipped to 9.1% from 9.5%. Return on average tangible common equity improved to 17.52% from 16.86%.
The board declared a quarterly cash dividend of $0.30 per common share, payable Nov. 10, 2026, up from the prior dividend level implied by the company’s latest reported payout total of $5.9 million for the quarter. Following these announcements, the company's shares moved 1.91%, and are now trading at a price of $42.10. If you want to know more, read the company's complete 8-K report here.
